CORDWOOD VILLAGE NOT A CATASTROPHE

The Orangetown Housing Authority (OHA) Board decided on January 27, 2016 by an unanimous vote not to rebuild eight one bedroom apartments lost in a fire on July 25, 2015. Insurance proceeds could be used to rebuild, however it was thought to be in the best interests of the complex as a whole not to rebuild. Eligible tenants who occupied destroyed units have been placed or soon will be placed in other units. The reasons not to rebuild are related to lacking financial resources of $2 – 3 million dollars needed to prevent Cortwood Village facilities from physically declining, as well as stabilizing rents at $850 per month as long as possible for a tenant population, that for many, where rent increases would be a financial hardship.

The OHA has over $6 million in outstanding bonds that cannot be refinanced. If the units are not rebuilt, the bond covenant requires the bonds be paid by the Town, as guarantor, if they do a study, agree with the OHA decision, and issue a negative determination. In addition the insurance proceeds for the lost eight units must pay off bonds if the Town Board does so. The OHA would then issue new bonds for about $8 million dollars, at a lower interest rate. The town would be reimbursed and with the interest savings and several additional million dollars the OHA would do needed capital improvements to the facility and keep rents reasonable.

The OHA is not defaulting on its bonds. The next payment is April 1, 2016 and will be paid. Insurance proceeds have been making up the lost rents from the eight units. If the Town Board disagrees with the OHA Board decision the units must be rebuilt with the insurance proceeds. The OHA will then continue meeting its bond payment obligations, however rents will likely increase at a faster rate than otherwise and higher than otherwise, and the facility will likely decline. The OHA cannot borrow monies without increasing rents materially.

Cortwood Village expenses are paid by rents, it is not Section Eight (8), and does not receive funding from any government agency, including Orangetown. The OHA is not running out of money. The Board has not discussed rent increases to occur in 2016. There is no financial catastrophe.